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The Republic of Trinidad and Tobago

IN THE COURT OF APPEAL

Civil Appeal No. P125 of 2012 Claim No. CV2010-01705

Between

RENNIE MOHAMMED NATALIE ALI-MOHAMMED

Appellants

And

RAFFEOUN ALI Respondent

FIRST CITIZENS BANK LIMITED Interested Party

PANEL:

N. BEREAUX J.A. J. JONES J.A. G. LUCKY J.A.

Date of delivery: April 22, 2020

APPEARANCES: A. Manwah and R. Dowlath Attorneys-at-law for the Appellants A. Mohammed Attorney-at-law for the Respondent A. Ramoutar and L. Rajkumar held for S. Moolchan Attorney-at-Law for the Interested Party

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REASONS

Delivered by Bereaux J.A.

(1) On 11th March, 2020 we allowed this appeal stating that we would give

reasons in a later written judgment. It was an appeal from a decision of

the High Court given on 16th May, 2012, in favour of the respondent’s

claim which she filed on 5th May, 2010. The judge held that a

memorandum of transfer made between the appellants and the

respondent was void for undue influence. By the deed of gift dated 17th

April, 1999 the respondent, Raffeoun Ali, gave the fee simple in the

subject property to the appellants. The property in question is a five

thousand, one hundred and twenty square foot parcel of land on which

stands a dwelling house, located in the ward of Tacarigua. The judge

declared Raffeoun Ali to be the owner of the property and granted an

injunction restraining the appellants from selling the property and a

declaration that they were not entitled to evict her.

(2) First Citizens Bank, mortgagees of the property, filed a successful

application to be joined as a party to the proceedings. This was after the

appellants had defaulted on payments on a mortgage on the property.

Relevant facts

(3) Raffeoun Ali died while this appeal was pending. Her son Reza Ali has

been substituted. I shall hereafter refer to Raffeoun Ali by this name or

as the deceased. She is the mother of Natalie Ali-Mohammed who is the

second appellant. Rennie Mohammed, who is the first appellant, is

Natalie’s husband. Raffeoun Ali therefore was his mother-in-law.

(4) The deceased became absolute owner of the property on 29th May,

1990, by virtue of survivorship under a joint tenancy, upon her husband’s

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death. She and two of her children – Reza (Junior) and Natalie –

continued to live there. Her other daughter, Neesha, migrated to Canada

in or about 1989.

(5) In or about September 1996, Raffeoun Ali went to the United States of

America and took up employment as a babysitter. She gave the

appellants permission to live on the premises. The premises were in a

state of disrepair. Rennie and Natalie took out a series of loans

(described by the judge as suspicious) to obtain financing for the repair

of the premises. I have summarised them as follows:

(i) In 1997, a loan of thirty-five thousand dollars ($35,000.00) from the

Bank of Commerce, Tunapuna (the first loan).

(ii) The first loan proved to be insufficient. They, in effect, then took a

further loan of three hundred thousand dollars ($300,000.00) from

Trinidad and Tobago Mortgage Finance Limited. The history of how

that loan came about was rather involved but it is necessary to

explain it because it shows the complicity of all the family members,

except Neesha, in the obtaining of financing to effect the repairs:

(a) After money from the first loan ran out and in order to

complete the repairs, Rennie and Natalie approached

FINCOR. They were advised to execute an agreement with

Raffeoun Ali to sell the house to them in order to qualify for

the loan. Raffeoun Ali agreed and the agreement was

executed. Unfortunately, the loan was not approved. They

were advised by FINCOR to have Raffeoun Ali transfer the

fee simple in the property to them by deed of gift in order

to obtain the loan. The deceased agreed and the deed of

gift was executed and the property transferred to the

claimants. Raffeoun Ali executed the memorandum of

transfer before a Notary Public in the USA. The loan was still

not approved because the appellants’ income was

insufficient.

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(b) Junior with the complicity of a friend at Trinidad and Tobago

Mortgage Finance Limited (TTMF) was able to qualify for a

loan from that financial institution to purchase the

property. The appellants transferred the fee simple in the

property to Junior after executing an agreement for sale of

the property to him in the sum of three hundred thousand

dollars ($300,000.00). Even though there was a sale

agreement presented to the bank, no money passed

between Junior and the appellants when the deed was

executed. Junior, as fee simple owner, mortgaged the

property to TTMF for the sum of two hundred and sixty-five

thousand dollars ($265,000.00) in favour of TTMF. The

money so obtained by the appellants was used to complete

repairs on the house. They paid the monthly instalments.

Junior never contributed. It was effectively the appellants’

loan.

(6) Later, Junior got married. He was unhappy with having such a liability

against his name, given his new status. He didn’t want his wife to find

out. He asked that his name be taken off the mortgage. The appellants

obtained a three hundred thousand dollar ($300,000.00) mortgage from

First Citizens Bank, Tunapuna. Junior received no money himself. With

that money the appellants simply liquidated Junior’s mortgage at TTMF

and Junior transferred the property to the appellants. The mortgage in

favour of First Citizens Bank was registered as memorandum # 43 of 20th

May, 2005. The appellants borrowed an additional ten thousand dollars

($10,000.00) from Hindu Credit Union to further upgrade the property.

The respective cases

(7) Raffeoun Ali’s case was that:

(i) She went to the United States of America in or around September

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1996. She gave the appellants permission to occupy the

property. She trusted them with her bank accounts and with the

property. She was in constant telephone contact with them while

in the United States.

(ii) In or about 1998, her brother informed her that the appellants

had taken out the first loan.

(iii) Sometime in or around 1999, Natalie called her and asked her to

“give her a sign on the property” so that she could get another

loan because more money was needed for renovations. Natalie

promised that once she had received the loan, she would transfer

the property back to her. Natalie told her that she would send all

the papers to her in New York and that she needed to take the

papers to a notary public, sign them and then send them back to

her.

(iv) She followed these instructions but did not seek independent

legal advice. She went to the office of a notary public in New York.

On April 17, 1999 she signed the document and mailed it back to

Natalie.

(v) She signed the deed of gift without understanding the contents

of the document and in the belief that she would regain her

interest once the loan had been secured and repaid. At no time

did she form an intention to divest her entire interest in the

property to the appellants. The property was obtained by trickery

and without the payment of consideration.

(vi) Raffeoun Ali returned to Trinidad in December 1999 but she did

not ask about the document that she signed. She returned to

New York in April 2000 until February 2003 when she returned

home. While she was in New York, she sent a monthly sum of

$400.00 USD towards the loan.

(vii) She first became aware of the First Citizens Bank mortgage in or

around July 2007. Neesha was visiting Trinidad with her family.

The family started asking why Natalie had not re-transferred the

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property to Raffeoun Ali.

(viii) Natalie told her that the property was mortgaged to TTMF then

to First Citizens Bank. Natalie said she would transfer the

property back to her if Raffeoun Ali paid two hundred thousand

dollars ($200,000.00) to her.

(8) The case for the appellants was as follows:

(i) They had lived on the property as fee simple owners since 2005

until 2010 when, in order to keep the peace, they decided to move

out until this matter was resolved.

(ii) Natalie contended that after her father passed away in 1990,

Raffeoun Ali sent her to live with her grandmother while she sought

employment in the United States. Her mother put Natalie’s name

on her bank account so that Natalie could access money for Junior

and herself to live. When her mother returned after about six

months, Natalie returned her bank book and never did another

transaction on that account again.

(iii) In or about August 1995, the appellants got married. Raffeoun Ali

invited them to live in the property until they could afford to buy a

piece of land and build a house for themselves.

(iv) In or about the end of 1996, Raffeoun Ali went to the United States

to work. She stayed until December 1999. In or about early 1997,

the appellants took out a loan of thirty-five thousand dollars

($35,000.00) in order to effect repairs on the house.

(v) However, thirty-five thousand dollars ($35,000.00) proved to be

insufficient to complete the job.

(vi) Prior to the signing of the agreement for sale, Raffeoun Ali

questioned Natalie extensively about the details of the loan with

FINCOR. She also told her that she would discuss the matter with

Neesha. Neesha told the respondent that she should be very careful

about what she was doing because she was giving up her rights to

the property. The deceased eventually told Natalie that she would

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agree to sign the agreement for sale because she wanted the

appellants to have the property. The deceased also told her that

Neesha and her husband were applying for her to get resident

status in Canada and she would only come to Trinidad during the

winter.

(vii) By Memorandum of Transfer No. 12 dated April 17, 1999 registered

on May 14, 1999 in volume 4092 folio 37, Raffeoun Ali transferred

the subject property to them by gift. She executed the

memorandum of transfer before a notary public in the United

States of America. They did not obtain the property by trickery or

by exerting any undue influence on her.

Findings of the Judge

(9) The judge gave an oral decision which he later reduced into written

reasons. He found that the memorandum of transfer was the product of

a misrepresentation by Natalie. Natalie misrepresented to her mother

that the transfer was necessary in order to enable a mortgage loan to be

secured by the appellants on the property and that the property would

be restored to the respondent. He agreed with the deceased’s

characterisation of the transaction. He accepted her version of events,

including her claim that she contributed toward the mortgage

repayments. He found that even on the appellants’ version of events, the

explanation as to how the sole legal interest in the subject property

became vested in them, corroborated to a large extent Raffeoun Ali’s

version of events.

(10) The judge found that the transaction was not a rational one and that

there was an evidential basis for a finding that Natalie was in a

relationship of influence over her mother. Raffeoun Ali’s intention to

divest herself of her sole ownership of the subject property was not the

product of her own independent thought and judgment. Rather, it was

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based on Natalie’s characterisation of the transaction as only vesting

temporary ownership in the appellants. The relationship was abused by

Natalie, whose behaviour amounted to trickery. The transaction by deed

of gift was one that called for an explanation. The burden shifted to the

appellants to explain that Raffeoun Ali was free from the influence of the

appellants. They had failed to do so. The appellants’ conduct had

disentitled them to further consideration as to the extent of any

equitable interest in the property.

Submissions

(11) Mr. Manwah submitted that the judge was plainly wrong. This was not

a case of actual undue influence. The respondent had never pleaded

actual undue influence. There was no evidence of Raffeoun Ali reposing

the type of trust and confidence in Natalie necessary to form a basis of

undue influence. The evidence of the deceased was that she had a good

relationship with all three of her children. There was nothing about the

relationship with Natalie which put it above the relationship she shared

with her other two children.

(12) Ms. Mohammed for the respondent contended the judge was right. He

had made findings of fact after seeing and hearing the witnesses. Those

findings were not to be lightly disturbed per Beacon Insurance Company

Ltd. v. Maharaj Bookstore Ltd. [2014] UKPC 21.

Conclusions

(13) We are of course acutely aware that the judge’s findings of fact are not

to be lightly disturbed. The much quoted comments of Lord Hodge in

Beacon Insurance Company Ltd. v. Maharaj Bookstore Ltd (supra) at

paragraphs 10 – 17 are so well known it is not necessary to refer to them.

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(14) In this case however we were of no doubt that the trial judge was plainly

wrong in his fact finding because:

(i) Undue influence was never pleaded by Raffeoun Ali. The only

mention of undue influence was in the relief sought.

(ii) Even if sufficiently pleaded, the plea was not supported by the

evidence.

The Law

Undue influence

(15) A short summary of the law of undue influence is sufficient for the

purposes of this appeal.

(16) The decision in Allcard v. Skinner (1887) 36 Ch. D 145 is apposite. See

also the decision of this court in Arjoon v. Mohammed, Civil Appeal No.

P109 of 2014. In summary, a deed of gift is liable to be set aside for undue

influence in two instances:

(i) Where the court is satisfied that the gift was the result of

influence expressly used by the donee for the purpose of obtaining it,

this is referred to as actual undue influence. In such a case the claimant

has to show that his free will was impaired by overt acts of the donee.

Actual undue influence “is typically some express conduct overbearing

the other party’s will” (per Lord Hobhouse in Royal Bank of Scotland v.

Etridge (No. 2) [2002] 2 AC 773 at paragraph 103) and is affirmatively

proven. There may also be actual proof of undue influence in the form

of misrepresentation or non-disclosure – See Arjoon v. Mohammed

(supra) at paragraph 99(vi) quoting Chitty on Contracts 33rd Ed.

paragraph 8 – 070.

(ii) Where the relationship between the donor and donee at the

time of, or shortly before, the execution of the deed of gift, was such as

to raise a presumption that the donee had influence over the donor, the

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deed of gift will be set aside in such a case, unless it is proven that the

donor’s act of giving was exercised by him with robust and independent

will. This is referred to as presumed undue influence. See Allcard v.

Skinner (supra) at 171 per Cotton LJ.

(17) In the case of presumed undue influence the claimant relies on

circumstances in which the law will infer undue influence.

(18) Whether the transaction has been brought about by undue influence is

a question of fact. The burden of proof is on the claimant who alleges

undue influence. The evidence required to discharge that burden

depends on the nature of the alleged undue influence, the personalities

of the parties, their relationship and the extent to which the transaction

cannot be readily accounted for by the ordinary motives in that

relationship and all the circumstances of the case. See the judgment of

this court in Arjoon v. Mohammed (supra) at paragraphs 33 and 99 citing

Lord Nicholls in Etridge.

(19) In the case of presumed undue influence proof that the claimant placed

trust and confidence in the donee, coupled with a transaction which calls

for explanation will be sufficient to discharge the burden which then

shifts to the donee to produce evidence to counter the inference which

would otherwise be drawn.

(20) In the case of presumed undue influence, the donee will successfully

rebut the presumption if he can show that the donor’s decision was the

result of an independent and informed mind.

(21) Proof that the donor received independent advice can rebut the

presumption and it is not necessary to show that such advice was acted

upon. See Inche Noriah v. Shaik Allie Bin Omar [1929] AC 127 at 135

per Lord Hailsham L.C.

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(22) There are certain special types of relationships in which one party

acquires influence over a donee who is vulnerable and dependent and in

which substantial gifts by the vulnerable and dependent individual are

not normally to be expected. In such a case the law presumes,

irrebuttably, that one party had influence over the other. It is sufficient

for the donor to succeed in raising the presumption that he proves the

existence of the relationship. The relationship of parent and child is an

example of such a relationship – per Lord Nicholls in Etridge. However

even then the donee can still succeed by producing evidence to the

contrary. See Chitty’s at paragraph 8-084.

Analysis

(23) The judge’s findings and conclusions are not supported by the pleadings

or by the evidence. In our judgment not only was undue influence not

pleaded but there was nothing in the evidence which justified such a

conclusion.

(24) The judge found as a fact that there had been undue influence by Natalie

in the execution of the memorandum of transfer. As to that finding, he

failed to consider that:

(a) There was no specific pleading of undue influence by the

respondent in the substance of the claim form. In both the claim form

and statement of claim there is only a prayer seeking a declaration that

the deed of gift was so obtained. Neither were particulars of undue

influence spelt out in the body of the statement of claim. The substance

of the claim was misrepresentation. On that ground alone the appeal

was entitled to succeed.

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(b) At the time the undue influence was alleged to have occurred,

Raffeoun Ali was living in the United States and Natalie, the alleged

influencer, in Trinidad.

(c) Prior to executing the deed of gift the deceased had sought the

advice of her other two children Junior and Neesha.

(d) The deceased only sought to avoid the transaction after almost

eleven years had elapsed and thus, only after her relationship with the

appellants had broken down.

(25) These errors were fundamental and they so flawed his conclusions that

we were entitled to consider afresh the entire question having regard to

the evidence. Having done so, we were satisfied that the appeal should

be allowed for the reasons just stated herein at paragraph 24 and for

those which follow.

(26) Even if there was a sufficient pleading of undue influence, or proceeding

on the basis that the claim was one of misrepresentation, the evidence

did not bear out a claim of undue influence, misrepresentation or actual

undue influence by misrepresentation.

(27) The fact that Raffeoun Ali was living in the United States of America while

Natalie lived in Trinidad, lent considerable doubt to the allegation of

undue influence. While by no means a farfetched allegation, the fact was

that Raffeoun Ali was pursuing her own interests abroad and was by no

means under the immediate influence or control of Natalie. Indeed the

evidence showed that she was an independent minded woman, mentally

agile and lucid, who made her own decisions, the decision to seek work

abroad included.

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(28) When coupled with the fact that she had sought the counsel of her two

other children, undue influence simply was not proven. After having

spoken with Neesha and Junior, the deceased took the decision to

transfer the property to the appellants. While it does not qualify as legal

advice, it demonstrated that the deceased sought the counsel of her

other children before bringing her own independent judgment to bear

on her decision. The fact that neither child raised any immediate

objection to the deed of gift leads inexorably to the conclusion that they

both implicitly agreed. Junior’s complicity in the procuring of the TTMF

mortgage is further evidence of his concurrence.

(29) As to the suggestion that Natalie took advantage of the relationship of

parent and child, that allegation on the evidence was not proven. First of

all, the presumption of undue influence in the parent/child relationship,

normally arises against the parent who is usually in the position of

dominance. In so far as it may be alleged that the child is in the dominant

position, the allegation is proven in the normal way. Second, the gift of

the property by Raffeoun Ali was not over and above what was to be

expected. Neesha was living abroad and from the evidence had no

intention of returning. Junior appeared to have no objection to the

transfer and special arrangements were made for him to be

accommodated at the home.

(30) Third, and in any event, the evidence did not suggest that Natalie

enjoyed any special relationship with her mother which was over and

above that of her two siblings. Indeed the deceased’s own evidence was

that she had good relationships with all three children.

(31) The judge found that the various loan transactions which the appellants

executed to secure financing for the repairs were suspicious. We did not

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agree. The evidence was that all the family members (with the exception

of Neesha), were concerned about the state of disrepair of the family

home and cooperated in seeking to obtain the financing for the initial

loan of thirty-five thousand dollars ($35,000.00). This included the

deceased. The deceased sent contributions from the United States of

America towards the repayment of the loan. Junior was complicit in

respect of both mortgages from TTMF and First Citizens Bank. The TTMF

loan was obtained on a false premise but the appellants bore the

financial burden and re-paid the loan. They continued to do so in respect

of the First Citizens Bank mortgage until sometime after the judgment

(which no doubt would have been a serious disincentive to continue

paying). In our judgment, the deceased was well aware of the

consequences of signing the memorandum of transfer and contributed

to the first loan instalments when she was in the United States of

America. We considered it more than likely that she was also aware of

the TTMF and First Citizens Bank mortgages, when these were

respectively executed in July 1999 and May 2005. The appellants

contended that not only did the deceased know of the TTMF mortgage

but she also contributed towards its repayment between 2000 and 2002.

Given the level of borrowing involved, the deceased, who, from the

evidence was quite mentally agile, would have been well aware that the

First Citizens mortgage was unlikely to be repaid during her lifetime and

that until then the bank would be unwilling to have the property

transferred back into her name. But even if (as she claimed), the

deceased found out about the First Citizens Bank mortgage in 2007, she

took no action until 2010. In our judgment the allegations of the

deceased were untrue and were raised simply because her relationship

with the appellants had broken down.

(32) In this regard, we also noted that the deceased’s action to recover

possession was only initiated some eleven years after the memorandum

of transfer was executed.

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(33) For all these reasons we allowed the appeal.

/s/ Nolan Bereaux

Justice of Appeal

/s/ Judith Jones Justice of Appeal

/s/ Gillian Lucky Justice of Appeal